VISA/MasterCard do have protections for the cardholder in place in this situation. Since Reg E does not apply, you are free to require more legwork on the part of the cardholder than you could if one if the errors that James cited were to apply. You may require that the claim be in writing, or that the cardholder first try and resolve the issue with the merchant.
Since it is very likely the customer will not be able to track down the merchant, the bank may have to file VISA chargeback code 53 or MasterCard code 4853 - "Defective Merchandise/Not as Described."
Since this is not a Reg E claim, in the event the chargeback process does resolve the dispute in the merchant's favor, you will be free to revoke any provisional credit that you provide to your customer.
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